Property Market

When you hear about a rising property market, remember it’s not the house rising in value. The house can only depreciate.

It’s the land the house sits on that goes up in value. It’s important to look at the property market from a land perspective. The land around the services and infrastructure most people want to live close to is fixed in supply.

What influences the property market?

The property market is not subject to the same laws of competition. It will sell for the highest prices that the economy can afford to pay for that location value. In other words land will always soak up any of society’s gains.

That’s why here at Markets & Money our property experts keep their fingers on the pulse of Aussie land prices.

You may have heard of the ‘prisoner’s dilemma’. It’s a standard example in a branch of economics called game theory. Well nowadays, the classical models of economics taught in universities have proven to be poor models of reality. Which brings us to the investor’s dilemma today.

Without consumption signalling that everything is OK, I don’t believe there’s any way the RBA will be raising interest rates. In fact, I think they’ll have to cut rates, regardless of concerns about high house prices.

A daily commute from Sydney to Melbourne will be feasible. It’s just a small part of a technological revolution slowly creeping into modern life. And it could be game-changing. This new technology could have a very strange effect on future Australian property prices.

Construction is big business in Australia. Because of its sheer size and importance, any weak spots are going to show up in construction first. As they did when the mining boom was critical to economic growth.

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